Designing suitable nanomaterials is an ideal strategy to enable early diagnosis and effective treatment of diseases. Carbon dots (CDs) are luminescent carbonaceous nanoparticles that have attracted considerable attention. Through facile synthesis, they process properties including tunable light emission, low toxicity, and light energy transformation, leading to diverse applications as optically functional materials in biomedical fields. Recently, their potentials have been further explored, such as enzyme-like activity and ability to promote osteogenic differentiation. Through refined synthesizing strategies carbon dots, a rich treasure trove for new discoveries, stand a chance to guide significant development in biomedical applications. In this review, the authors start with a brief introduction to CDs. By presenting mechanisms and examples, the authors focus on how they can be used in diagnosing and treating diseases, including bioimaging failure of tissues and cells, biosensing various pathogenic factors and biomarkers, tissue defect repair, anti-inflammation, antibacterial and antiviral, and novel oncology treatment. The introduction of the application of integrated diagnosis and treatment follows closely behind. Furthermore, the challenges and future directions of CDs are discussed. The authors hope this review will provide critical perspectives to inspire new discoveries on CDs and prompt their advances in biomedical applications.